Which areas of the UK offer landlords the shortest times to earn back their investment money?

“Making your buy-to-let more energy efficient is another way to boost rental income, as it may make the property more desirable to tenants due to lower energy bills”
– Mark Michaelides – Molo

Buy-to-let properties are a long-term investment, often taking many years for landlords to claw back the money initially spent on purchasing the property.

To find out where landlords should be heading for a quicker return, digital mortgage lender Molo has conducted new research, using internal data to reveal how many years it would take for properties in different areas of England and Wales to buy themselves back through rental payments.

The study reveals that property in the top locations will pay for itself in a little over 12 years, whereas it can take over twice as long in other areas.

Alongside the study, Molo has also created a rental yield calculator so first-time and experienced landlords can understand more about the potential performance of current and future property investments, as well as be able to compare locations.

Property buys itself most quickly in Wales, taking just over 12 years for landlords to earn back their investment through rent

The research reveals that Wales is the top location for property to buy itself back the quickest. With an average purchasing price of £105,035 in the Central Valleys and an average monthly rent of £697, it takes around 12.56 years for landlords to pay off the final value of their property — which is over twice as fast as other areas in England and Wales.

Hartlepool and Stockton-on-Tees in the North East follow as one of the top areas for buy-to-let landlords to earn back their investments quickly. The average purchasing price in this area is lower than in the Central Valleys at £89,889; however, average rental income is also lower at £592, meaning it takes a slightly longer 12.66 years for property to buy itself here.

In third place is another area in the North East, South Teesside, which takes 13.05 years on average for property to pay for itself. This is followed by Swansea in Wales (13.69 years) and Lancaster and Wyre in the North West (14.07 years).

It takes nearly 30 years for property to buy itself in Camden and City of London — longer than anywhere else in England and Wales

London has one of the lowest yields for landlords to invest in buy-to-let properties, which can have an impact if they’re hoping to make their money back quickly, with multiple areas in the capital ranking among the bottom 10.

Camden and City of London is the worst area of all locations analysed, with a high purchase price of £760,888 and average monthly rent of £2,268, meaning it takes 27.96 years on average for a property to buy itself here.

West Essex comes next, as landlords in this area can expect to pay off property value in an average of 27.47 years, considering the average purchase price of £593,311 and monthly rental income of £1,800. This is followed by Dorset in the South West (27.26 years) and Bromley in London (27.13 years).

Vice President of Strategy at Molo, Mark Michaelides says: “Landlords looking for additional ways to maximise rental income and earn back their money more quickly may consider home improvements, such as a new bathroom, kitchen or extension, which can increase both the rental potential and overall value.

“Making your buy-to-let more energy efficient is another way to boost rental income, as it may make the property more desirable to tenants due to lower energy bills.”